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Antitrust review delays ChemChina’s Syngenta purchase

Regulators appear to be preparing a closer look at this deal amid massive agriculture consolidation

by Alexander H. Tullo
October 26, 2016 | A version of this story appeared in Volume 94, Issue 43

Credit: Syngenta
Syngenta develops soybean seeds and treatments.
Furry soybeans hanging from a vine in the dark.
Credit: Syngenta
Syngenta develops soybean seeds and treatments.

ChemChina’s $43 billion deal to buy Syngenta will likely be delayed as the European Union and other regulators deepen their scrutiny of the purchase and other transactions in seeds and agrochemicals.

ChemChina and Syngenta have been planning on a close by the end of the year. At its quarterly earnings conference call earlier this week, Syngenta chief executive officer Erik Fyrwald told analysts he sees regulatory scrutiny extending well into the first quarter of next year.

With other large agrochemical deals looming, such as Bayer’s purchase of Monsanto and Dow Chemical’s merger with DuPont, regulators are worried that all the consolidation will hurt farmers.

A deeper European Commission investigation of the Dow-DuPont deal, announced in August, will probably put off completion of that transaction until February 2017. And recent congressional hearings have focused on whether the wave of transactions will hurt competition in agrochemicals.

Compared with the other agrochemical deals, the overlap between ChemChina and Syngenta, which would combine for about $16.7 billion in agriculture-related sales, is moderate. ChemChina’s Adama affiliate is a maker of generic crop protection chemicals.

The companies reportedly haven’t submitted proposals to the European Commission to sell off assets to ease antitrust concerns, a possible sign that they expect a deeper probe of the deal, which could come as early as this week.

“ChemChina and Syngenta remain fully committed to the transaction and are confident of its closure,” Fyrwald told analysts.

In fact, all the executives involved in agriculture deals say they are confident they will pass regulatory review relatively unscathed. By and large, they have been arguing that the combinations are good for innovation and crop productivity.

They have also been pointing out that the merging companies aren’t usually competitors in the same subsectors of the seed and crop protection chemicals business. “The unique thing about this transaction is there is very little overlap,” Monsanto CEO Hugh Grant, told analysts about his company’s transaction with Bayer earlier this month.



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